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Unformatted text preview: , this is the price the producers get and the consumers pay Question 2 (a) False. With the price control, there was a shortage of gasoline; when the price rises, suppliers produce more gasoline and demanders are able to purchase more. (b) False. The negative weather shock shifts the supply curve to the left and increases the price of the crop and, because the demand for it is inelastic, boosts farmers’ total revenue. (c) This is true, but remember the mechanism by which the price change happens is different. With a tariff, the price increases because foreign suppliers decrease their supply of the good at all prices. The quota, on the other hand, forces the export supply curve to become vertical at the quota amount. Q P 14 360 S D 300 P quota = 20 3...
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